By Vangelis Dourakis

The new tax exemption regime legislated by the State for those who choose to either “open” their empty apartments to rent them out or convert short-term leases into long-term ones hides some surprises. Although the lure of the 3-year tax exemption is moving in the right direction to deal with the housing crisis, the whole process is nevertheless “mined” by the “fine print” of the relevant provisions.

It is indicative that based on what is provided in the law, in order for someone to maintain the tax exemption in question, the lease must not be interrupted for this 3-year period, which clearly makes any property owner who takes advantage of the provision a “captive” of the tenant.

The “fine print” and “traps” of the law

However, the tenants themselves may prove to be “losers”, as P.OM.I.D.A. points out, as there are categories of citizens who do not have the ability to sign 3-year leases.

A typical example is public and private sector workers who need to reside in places of work other than their permanent residence, for a period of less than three years.

So what exactly is the “trap” in the “fine print” of the law, which essentially acts as a barrier to the emergence of serious interest in these beneficial provisions?

Article 9 of Law 5162/2024 provides, among other things:

“b) If within the three (3) years of approx. a) the property:
ba) is vacated, the exemption ceases to apply from the tax year in which it is vacated,

bb) is made available for short-term rental, the exemption ceases to apply from the first year of the rental.”

What does this mean practically? The tax exemption ceases to apply and is lost for the lessor if within the three years of its duration the residence is vacated, i.e. if it remains vacant and without a next tenant.

Therefore, if the lessor cannot immediately find a new tenant, the damage for the intervening months that the residence may remain vacant is exclusively his.

And this applies even if the tenant’s early departure is either due to force majeure or if he falsely stated that he intended to stay for the full three years or was evicted for non-payment of rent.

Who is at risk of paying back taxes?

Another point that those who want to take advantage of the provisions of the law should pay attention to is that if the residence within the three years of the contract is made available for a short-term lease, the exemption ceases to apply retroactively from the first year of the lease, in which case it will also be issue of retrospective payment of income tax on all rents previously collected which were exempt from income tax.

It should also be noted that the regulation includes leases that have a signature date from 8.9.2024 and up to 31.12.2025.

Therefore, the tax exemption is definitively lost for the rents from residences that until 31.12.2025 will not have completed the three-year vacancy or the annual availability for short-term rental.

One could say that families with many children who are looking for a house are also “losers”, as the law limits the number of square meters of houses that can be made available for rent in order to “win” the tax exemption: The surface of main premises must not to exceed 120 sq.m.

Usually large families, by definition, have a self-evident need for a residence with an area much larger than 120 sq.m.